Is GrubHub Seamless Hungry for an IPO?



Uh oh: did someone just leak GrubHub Seamless’s big secret? The Wall Street Journal reported Thursday afternoon that according to insider sources, the online restaurant menu and takeout-ordering service has made a confidential filing for an initial public offering. The company’s filing is allowed to be kept secret because under U.S. securities rules, companies with less than $1 billion in revenues in the past fiscal year are allowed to initially file secretly with regulators. However, that rule doesn’t take into account the possibility of someone spilling the beans.

No reports have been confirmed, but if the GrubHub Seamless rumors do prove true and executives are in the midst of their IPO filing, it won’t come as a surprise to many who know the in’s and out’s of the company’s business. The Journal reports that before GrubHub and Seamless merged, the latter already planned on going public on its own, but those plans were then delayed when the two parties consolidated in 2013. Many now expect GrubHub Seamless to launch the IPO in the first half of the year, though it is unclear how much the sale would raise or value the company at.

According to the Journal, New York-based Seamless was founded five years before GrubHub in 1999, and then acquired by Aramark (NYSE:ARMK) in 2006. Spectrum Equity Investors subsequently bought a minority stake in Seamless in 2011 for $50 million, while the rest of the company was spun off to Aramark’s own private-equity oweners as a dividend in 2012. Meanwhile, as all this was taking place, GrubHub was establishing its business over in the Midwest – officially launched in 2004 — and raising nearly $85 million in venture capital funding from firms including Benchmark Capital, DAG Ventures, and Origin Ventures.

The two parties decided to merge in May 2013, three months before T. Rowe Price Group (TROW) bought a stake. As of December 31, T. Rowe’s New Horizons Fund owned 1.4 million shares, according to the Journal. GrubHub Seamless will now move forward with this backing.

If the rumors are true, it’ll be interesting to see how the company fares in the IPO trials, as insider sources report that GrubHub Seamless executives have met with investment banks, but they are still unsure how much the company could go for. GrubHub Seamless has certainly made a name for itself, together acquiring MenuPages and Dotmenu in 2011 before they combined, but it is still hard to predict how such a niche company will fare. As the Journal highlights, with Seamless based in New York and GrubHub operating out of Chicago, the merged company now has 28,000 restaurants across 600 cities. The company generated more than $100 million in revenue in 2012.

More From Wall St. Cheat Sheet: